January 9, 2008

INCENTIVE TO SAVE:

FairTax's Plausible Solution (DIANA FURCHTGOTT-ROTH, January 9, 2008, NY Sun)

Although Congress might not be ready for this drastic step, a move from taxing income to taxing consumption would be highly desirable. [...]

Many objections have been made to the FairTax. A professor of economics and law at the University of Michigan, James Hines, jokes that America doesn't have consumption taxes because Democrats think that they hurt poor people and Republicans think that they make raising revenue too easy, thereby encouraging spending. America will only get them, he wrote, when Republicans realize that they hurt the poor and Democrats see that it's easy to use them for raising revenue.

Some say it's impossible for Congress to give up income taxes, that Congress would just tack a new federal sales tax on top of existing taxes. But it's certainly within Congress's power to eliminate income taxes, which were instituted only in 1913, and if the congressional spending beast gets a new source of revenue, it might be willing to make the change.


State legislators aren't going back to their constituents and telling them they refuse to repeal the income tax.

Posted by Orrin Judd at January 9, 2008 12:17 PM
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